Welcome Building Business Acumen. Important Questions. How much do you know about Epsilon and ADS Corporation’s Key Success Measures ? (or Key Performance Indicators (KPIs) ) Let’s find out!. Pop Quiz. For fiscal year 2011 : Epsilon ADS.
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How much do you know about
Epsilon and ADS Corporation’s
Key Success Measures?
(or Key Performance Indicators (KPIs))
Let’s find out!
For fiscal year 2011: EpsilonADS
1 - How much Cash was on hand?$______$______
2 - How much Cash was generated by
Operating Activities? $______ $______
3 - What was our Total Revenues? $______$______
4 - What was our Net Income?$______$______
5- What was our EBITDA Margin? ______%______%
6 - What was our Net Margin?______%______%
7 – What was our Return on Assets? ______%______%
8 - How much did Total Revenue change YOY? ______%_______%
9 - How much did EBITDA change YOY? ______%_______%
10 - How much did Net Income change YOY? ______%_______%
…the ability to make good business decisions in a timely manner with an understanding of how the decision should impact the business.
Booz Allen Hamilton 5th annual Study
Every business must focus on fivebusinessdrivers.
Let’s Start a Business!
Sources of Cash
Pro: No Cost -Con: Time
Pro: Immediate -Con: Reduces Assets
Pro: Immediate -Con: Cost (Interest)
Can a company have too much Cash?
Can a company have too much Cash?
More attractive in a buy-out.
Shareholders don’t like it.
May make poor decisions.
Companies ought to keep just enough cash to cover their interest, expenses and capital expenditures; plus they should hold a little bit more in case of emergencies.
What is required to grow and maintain the business.
Cash – the bills and coins in the register, petty cash, and cash in the bank. Also includes cash equivalents, like CD’s and other highly liquid investments, that easily convert into cash within 90 days.
Cash Flow – The cash generation from core business activities calculated from the difference between the cash that flows into and out of the business in a given period of time (month, quarter, annual)
What is left over after you have subtracted expenses. Can be expressed in dollars ($) or percent (%).
EBITDA/EBITDA Margin– Reflects earnings before interest and taxes.
Net Profit / Net Profit Margin – Profit after all expenses have been subtracted from sales.
Total Revenues(Sales) $100 100%
- Cost of Operations $ 57
- Provisions For Loan loss $ 10
- General & Admin. (G&A) $ 3
=EBITDA $ 30 30%
-Depreciation & Amortization $ 5
= Operating Income$ 25 23%
-Interest & Other Expense $ 9
-Taxes $ 6
= Income From Continuing Operations $ 10 10%
-Losses from discontinued operations $ --
= Net Income $ 10 10%
S&P Average TTM: 13%
Who has much higher profit margins?
Coca Cola 33%
Why the high margins?
S&P Average TTM: 13%
Who has lower profit margins?
Why the low margins?
EBITDA $ 965.8
+Stock Compensation Expense $ 43.5
+Loss on Sale of Assets $ --
+Merger and Other Costs $ --
= Adjusted EBITDA$ 1009.3
S&P 500 Averages: Net Margin = 11% 2010 13% 2011
i.e. cash, inventory and ratings
What we have and how well we use what we have.
Return on Assets (ROA)— percent value of Net Income to Total Assets
ROA = Net Income = $315 = 3.51%
Total Assets $8,980
The ability to increase year over year, quarter over quarter, and/or month over month.
“In today’s business world, no growth means lagging behind in a world that grows every day…”
“Investors expect it, employees are energized by it, customers are generally attracted to it and executives are measured by it.”
Net Income Growth
-The External Customer, Vendor/Re-seller, or Internal Customer that has the ability to impact the success of the business..
“the focus is very simple. It’s to continue to drive double-digit growth. And second, and this is also critical, is we want to make sure that when we’re dealing with the Global 1000 that they view Epsilon not as just a provider of digital agency or analytics or distribution or data, but they view Epsilon as the place to go to handle their entire needs when it comes to this targeted marketing.
And so, much time and effort will be spend on integrating all the different parts of Epsilon in the sales team to make sure that we’re selling no longer a $3 million or $5 million contract, but a $40 million or $50 million contract and that’s the ultimate goal, very similar to the other two parts of the business where it’s all or nothing with our clients.”
2011 Year End Press Release
We’ve Invested Over $1.3 Billion To Be The Comprehensive Provider
Aspen Marketing Services
ICOM integrated into Epsilon
Epsilon acquired CPC Associates
Epsilon acquired by
1969 Oct 2004 Sept 2005 Nov 2005 Apr 2006 Sept 2006 Feb 2007 Jan 2009 Jul 2010 Jun 2011
Epsilon acquired the Equifax Direct Marketing Services Division
Epsilon acquired DoubleClick Email Solutions
Frequency Marketing, Inc. integrated into Epsilon
Design • Development • Hosting
Digital & Interactive
Email Service Provider
Web design & hosting
Real-time decision support
Technology platforms & Program
Data Processing Services
NCOA, PCOA, M/P
115 million HH, 225 million individuals
with 31 different sources.
HH Income, Credit Card Capacity,
Financials Stress Indicators, Home
Value, Net Worth
Self-reported lifestyles & interests
from 40 million consumers
Online and Offline purchase
Information, with details RFM data
For 60 millions+ HH
Behavioral data w/life event and life stage triggers, + purchase propensity
Strategic Consulting & Advanced Analytics
Program Strategies, Investment Justification, Customer Segmentation, ROI Analytics, Predictive Modeling & Marketing Mix Modeling
Websites, Email & Mobile Campaigns, Social & Word-of-mouth Programs
Concept to Mailbox Campaigns, Web-to-print Technology & Database Management
Consumer Promotions & Events
Loyalty & Continuity Programs, Partnerships & Sponsorships, In-Store Marketing, Mobile Tours, Guerilla Marketing & Sampling Events
Consumer Promotions, Direct, Digital & Experiential Marketing
Cash-On hand -Generation
Growth -Top Line -Bottom Line
Profit -Revenue -Expenses
Assets -Strength -Utilization
Revenues- Expenses= Income
= Top Line
(Revenue = Sales)
Total Revenue: 3,173,287
EBITDA margin =30.44%
Net profit margin = 9.94%
Net Profit Margin
Net Income: 315,286
Total Rev. ÷3,173,287
S&P 500 Ave. = 13%
= Bottom Line
= Net income /
Diluted # of shares
Statement of Income (P&L)
Lower costs by 100K
Raising Revenues $100M = $26
Cutting Costs by $100M = $62
What are the implications of each action?
Financial (asset) Strength
Assets = Liabilities + Equity
Snapshot in time
Becomes Cash < 1 year
Current Ratio = 1.71
Due in < 1 year
Cash from operations + Cash from investing + Cash from financing = Net Change in Cash
Net Change in Cash
812.7 + 153.1 = 965.8
812.7 + 153.1 = 965.8
629.2 + 143.2 = 772.4
Key Success Measures
*Based on a 1993 Brigham Young University Study
When a Person Says …
Chances of the idea being incorporated into their life is...
“That’s a good idea”… 10%
“I’ll do it!” and commits... 25%
Says when they’ll do it… 40%
Plans how to do it… 50%
Commits to another… 60%
Sets a future specific appointment with the
person they committed to...
Good Management Technique!
* nasdaq.com * finance.google.com
* reuters.com * hoovers.com
* yahoo.com * smartmoney.com
Glossary: page 58